Supreme Court Seems Split on What Is ‘Appropriate’ in Setting Clean Air Costs

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A coal-fired power plant in Fort Gibson, Okla. A case heard Wednesday was the latest challenge from industry groups to the Obama administration’s environmental agenda.CreditNick Oxford for The New York Times

WASHINGTON — The Supreme Court on Wednesday seemed closely divided over the fate of one of the Obama administration’s most ambitious environmental initiatives.

Lawyers for industry groups and some 20 states told the justices that Environmental Protection Agency regulations that set limits on emissions of mercury and other toxic pollutants from power plants had failed to take account of the punishing costs they would impose, a point that resonated with Justice Antonin Scalia.

“I would think it’s classic arbitrary and capricious agency action,” he said, “for an agency to command something that is outrageously expensive and in which the expense vastly exceeds whatever public benefit can be achieved.”

The legal question in the case was whether the agency had violated the Clean Air Act, which required the regulations to be “appropriate and necessary,” by failing to undertake a cost-benefit analysis.

Justice Anthony M. Kennedy sounded doubtful. “ ‘Appropriate’ is a capacious term,” he said, suggesting that it did not mandate weighing costs and benefits.

Aaron D. Lindstrom, the solicitor general of Michigan, one of the states challenging the regulation, said the word “appropriate” helped his side.

“One of the things that’s encompassed within the term ‘appropriate,’ ” he said, “is that it looks at all of the circumstances in the context of determining whether or not you’re going to regulate. Cost is a relevant circumstance. So the very fact that it’s capacious cuts against them.”

Lawyers for the agency and its supporters responded that it was not required to take costs into account when it made the initial determination to limit emissions. But they added that it did so later in the process and that, in any event, the benefits far outweighed the costs.

Mercury is “an extremely poisonous neurotoxin,” said Paul M. Smith, a lawyer for businesses supporting the agency, adding that it causes developmental delays and cardiovascular problems.

In its brief, the agency said the “quantifiable benefits” of the regulations “include the prevention of up to 11,000 premature deaths each year.”

The two sides used very different numbers to calculate costs and benefits.

“This single regulation now on air toxins imposes annual costs of $9.6 billion,” said F. William Brownell, a lawyer for industry groups challenging the regulation. “And what does one get for it?” The answer, he said, was about $6 million in benefits.

Solicitor General Donald B. Verrilli Jr., representing the agency, did not dispute the annual cost of $9.6 billion. But he said the benefits amounted to $30 billion to $90 billion.

Chief Justice John G. Roberts Jr. responded that the “fairly dramatic disparity” between the two sides was a consequence of bad math on the agency’s part, which he said had taken credit for incidental benefits that could also have been achieved through different regulations. “It’s sort of an end run,” he said.

The three consolidated cases argued Wednesday were the latest in a series of challenges from industry groups to the Obama administration’s environmental agenda. The cases included Michigan v. Environmental Protection Agency, No. 14-46; Utility Air Regulatory Group v. Environmental Protection Agency, No. 14-47; and National Mining Association v. Environmental Protection Agency, No. 14-49.

In the term that ended in June 2014, the justices heard cases on two other sets of environmental regulations — one aimed at limiting power plant pollution that wafts across state lines, the other at cutting planet-warming greenhouse gas emissions. The E.P.A. won the first case and largely prevailed in the second, though the Supreme Court indicated that it remained prepared to impose limits on the agency’s regulatory authority.

In the mercury case, too, the administration prevailed last year in the United States Court of Appeals for the District of Columbia Circuit, which ruled that the agency’s interpretation of the Clean Air Act was reasonable.

“For E.P.A. to focus its ‘appropriate and necessary’ determination on factors relating to public health hazards, and not industry’s objections that emission controls are costly, properly puts the horse before the cart,” Judge Judith W. Rogers wrote for the majority.

In dissent, Judge Brett M. Kavanaugh said that, in context, the statute required attention to costs “as a matter of common sense, common parlance and common practice.”

Much of the argument on Wednesday concerned a suggestion from Justice Stephen G. Breyer that costs could properly be considered later in the regulatory process by placing different kinds of power plants in different categories and subcategories.

“Where did this ‘categories’ come from?” Justice Scalia asked. “This is an argument I never heard of, and I’m not sure it’s right.”

But Mr. Brownell, the industry’s lawyer, said the approach might have theoretical merit, at least.

“Conceptually, your honor,” he told Justice Sonia Sotomayor, “I imagine they could have subcategorized away the entire industry, but that’s not what they did.”

Mr. Smith said the theory had been there all along, though he praised Justice Breyer’s law clerks for doing “a wonderful job figuring it out again.”

A version of this article appears in print on , on Page A12 of the New York edition with the headline: Supreme Court Seems Split on What Is ‘Appropriate’ in Setting Clean Air Costs. Order Reprints | Today’s Paper | Subscribe